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2/21/13 No Way to Stop Federal Spending

We’re as out of control as a car crashing through the railing in an off-camber, decreasing-radius curve on a steep mountain road, careening to the bottom. We will not stop until the forces of inertia and gravity have equalized at the bottom of the hill. What’s left may not be worth picking up, other than to reduce the eyesore of twisted metal left rusting in the landscape. Thank you fiat currency! You’re not money at all, since money is worth something. You, fiat currency, are why the government can continue to spend far more than it takes in, since currency has no value other than the people’s willingness to accept it. The government can print all of it it wants, then debase it at will.

When our government talks of cutting spending, it usually is referring to reductions in the rate of future spending increases. Our current Executive/Congressional standoff, with all its dire warnings of sequestration and automatic spending cuts, reduces government deficit spending by a trillion or two dollars over a ten-year period, depending on which news article or government report you look at. At best, it cuts government spending by $200 billion a year, leaving a deficit, based on current spending, of only a trillion or so, which continues to be added to our total federal debt. This is not a real spending cut, does nothing to reduce our federal debt, and is a perversion of the truth, since the debt grows in spite of the spending cuts. It’s really difficult to get at the real numbers. They’re a moving target, and the true numbers are published in the most obscure places, with agencies concealing them like mice hiding in a cat-filled hay-loft, lest they be discovered.

If I came to your business and looked at your financial statements, your monthly Profit and Loss Statement, or your statement of Income and Expenses, I could think of many things I could ask you about how you manage your business . . . all of them pertinent. I could look at your cost of goods sold and your sales figures and determine your operating margin. I could look at your expenses for office space, equipment, insurance costs, employee salaries, direct labor expenses, etc. Every business person uses these reports to manage their businesses, see where they can reduce costs, and determine, if necessary, when and if they need to raise their selling price to generate more operating margin (gross profit), since it is the margin from which all your expenses are paid. Without margin, you may as well sleep late every morning, or even better, go fishing.

The federal government makes this difficult, though, by the way it lumps things together on its audited statements for its own agencies.

What has precipitated this is a John Stossel report, and a Washington Post article on The Christopher Columbus Fellowship Foundation . . . a very small independent government agency that was established by an act of Congress in 1992, according to 20 USC CHAPTER 67 Sec. 5701, to:

. . . encourage and support research, study, and labor designed to produce new discoveries in all fields of endeavor for the benefit of mankind.

That sounds noble enough, doesn’t it?

The Christopher Columbus Fellowship Foundation (The Foundation) was initially funded by the sales of specially minted coins sold by the U.S. Mint at a premium to the public. The margin on the sales of these coins provided an endowment on which The Foundation was to operate, though the law allows for it to receive appropriations as well, which it does. Endowments soon run out when they have to be deposited with the US Treasury and invested in government bonds, which are as safe as any investment, though Moody’s downgraded the value of government bonds. But they pay almost nothing in interest, thanks to the Federal Reserve’s monetary policy and artificially low interest rates, because the government cannot afford for interest rates to rise, else they would default on bond payments. Just think of how a two-point increase in interest rates would consume the government’s income simply to pay interest on the debt. Hold your breath, because it’s coming, and most likely soon.

The Foundation’s board members serve with no pay, but of course, are justly entitled to reimbursement for expenses of travel, meals, and lodging when engaging in official business. My friend, Jim Herring, whom I have long admired, is currently serving as The Foundation’s Vice-Chair.

The Office of Management and Budget and Congressional Budget Office documents, and the audited financial reports of The Foundation itself are available for everyone to read, though they are more than a little cryptic. They contain no Statement of Income and Expenses as recognizable by any business person. Their statement contains such line items as “Program Obligations.” It turns out that it is nearly impossible to separate the program obligations of the awards it makes to prize-winners from the program obligations of The Foundation’s administrative expenses and salaries.

It is also difficult to get information online to determine how many employees The Foundation actually has. I suppose I could pick up the phone and call Jim Herring, but I would rather save my phone call to him for a more pleasant reason. He will see this blog post soon enough and may decide to call me, or respond, and if so I will welcome even his excoriation. I’m sure that Jim Herring thinks this program is a valuable service to the American people. If it is, I wish they would make it easier for me to determine just how effective it is, as any charitable organization would and should do, in determining how much money The Foundation spends on itself versus how much money it puts into the hands of those it deems worthy of receiving the awards it provides as its reason for existence. It’s not an easy determination.

One watchdog web site says that The Foundation has two employees: an Executive Director with a salary of $106,000 per year, and an executive administrator (they used to call these clerks and assistants), who makes $31,000 per year. Another watchdog website says The Foundation has nine employees with an average salary of $68,903 per person per year. The law itself calls for the executive director to be a GSA Executive Level V Employee, which carries a salary range of up to $145,500, and for other employees to be no greater than Civil Service Pay Grade GS-15, which has a range of $99,628 – $129,517. I wish I had a nice GS-15 level job in a small office of a small, obscure government agency, along with its very generous sick leave, vacation, health and retirement benefits.

Since there is no line item on their audited statement I have been able to identify as employee salaries or expenses, I have no real way of knowing. All I can find is that there is about a $600,000+ balance on deposit in the U.S. Treasury that belongs to The Foundation, and some $25,000 of corporate and private contributions, and a program expense of $450,000, of which nearly all was appropriated by Congress through an earmark initiated by my own Mississippi Senior Senator, Thad Cochran.

One has to sort through thousands of web pages that are describing how to apply for The Foundation’s grants and awards, since nearly every college, university, and school district has a page dedicated to how to go about getting one . . . but they don’t come so easy. In fact, I think The Foundation could be well endowed if they could get a couple of dollars from every web page that is directed towards informing people about how to apply for the grants and awards.

The program seems to have paid out about $195,000 of awards to 12 different recipients in 2012. This may be completely untrue, and if it is, I apologize, and someone please direct me to a single page that shows the award winners and the amounts they received. The Foundation’s own web site does not do this on a single page. Funny, its audited statement lists the lease payment of a copier for about $2,100 annually, but does not have a line item for Awards Presented. It also lists the terms of a lease of the office property it maintains in Auburn, NY, but does not say how much the lease is. I’m sure all this information is available, but it’s nearly impossible to find on-line due to the tens of thousands of people telling you how to apply for and obtain these awards.

So, I’ll resort to my own business management skills with what limited cryptic information I’ve been able to glean, little of which came from the audited statement of operations. Out of an annual appropriated budget of about $450,000, awards seem to have been made in the amount of $195,000. If this was done from the appropriated budget, then it’s likely that the two employee scenario is correct, since the nine employee scenario would have put them into the use of their endowment principal just to cover day to day operations, which, hopefully, no one would be so foolish as to do. But, the awards presented could have come out of the endowment on deposit with the treasury, and all of the appropriations used to cover the operating expenses; I’m just too weary to search any further. But, if that’s the case, then it costs nearly two dollars for every dollar awarded. Hmmmm! I must be missing something. I sure hope so.

By the way, one of the awards is used to send a winning high-school class on a trip to Disney World. I’m prudently declining to comment here on what the benefits to mankind may be for this award.

Here’s the case in a nutshell —

The President wants to kill The Foundation, mainly, no doubt, because all liberals want to kill any program that may honor the evil Christopher Columbus in any way. The world would, of course, be a better place if only the malevolently incompetent Columbus had not sailed West looking for the East. North and South America would still be undiscovered and uninhabited by anything but its tribal, indigenous, stone age people. Russian satellites would no doubt have never been able to see the continental landmasses that Columbus opened for European exploration . . . which angrily reminds me of the media reference to the landmass between Mobile and New Orleans after Hurricane Katrina.. The world would still be flat were it not for Columbus. But that’s not the only reason the President wants to kill The Foundation; he says it’s redundant and serves no real purpose.

As you might suspect, the President and I don’t agree on much. Remarkably, we may have found a tiny bit of common ground. And there’s bipartisan support in Congress to get rid of The Foundation. Senator Tom Coburn (R-OK) has a list of independent and redundant Federal Agencies he’d like to see abolished. The Christopher Columbus Fellowship Foundation is on that list.

The stopper? It seems that Sen. Thad Cochran still likes this program. Maybe he likes it because Jim Herring is the Vice-Chair and perhaps slated to become the chair. It’s not like this is a personally valuable thing to anyone who donates their really-personally-valuable-finite time to serve since neither board appointments, the vice-chairmanship, nor even the chair pays any money.

Maybe Jim Herring and Thad Cochran know something I don’t, which is not only possible, but likely. If they do, I wish they’d tell me. As of this moment, I see no purpose for the continuation of this program. One single request from the combined personal prestige of Jim Herring, Tom Coburn, and Thad Cochran could have some private foundation funding all the apparent $195,000 of award money annually, rather than continuing an inefficient government program that delivers seemingly less than half of what it costs to its stated, lawfully-delegated primary mission.

I admit that Foundation is more efficient than the UN’s World Health Organization and UNICEF, but emulating the UN’s efficiency is not a good model for any business or government agency.

I’ll make this promise . . . if I get a letter, even one that excoriates me for not knowing what the hell I am talking about, since I have already admitted it due to the difficulty in obtaining what should be relatively easy obtainable information on such a small program, I will publish it here.

I reiterate: I have the highest respect and admiration for Jim Herring. You can read why on another page on this same web site. I suspect I’ll write more about this later, but I’m exhausted now from spending so much time finding mountains of mostly irrelevant information, and very little knowledge.

This is another promise: I am a conservative, first, and a Republican, second. Right now, I’m in a very anti-incumbent mood because we, as Americans, must be willing to limit the terms of our own congressional representatives if we’re going to get true reform in Washington. I know . . . I’ve already been castigated because of this attitude, since Thad Cochran brings home the bacon due to his advanced seniority and his willingness to use earmarks to make sure Mississippi gets more than its fair share of the Federal dole. But I am done with this thinking. I didn’t vote for my own Republican Congressman in the past election because of this anti-incumbent mindset I am carrying around . . . I simply did not mark the ballot since I also couldn’t vote for his Democratic opponent. We are committing suicide with all this Congressional experience and seniority, since most of the seniority is the collection of the experience required to get re-elected. Getting wealthy while in congress is a curious and mysterious thing to me. Isn’t it curious to you, too?

It is a faulty bit of logic to want other state’s citizens to send their representatives home when we want to re-elect our own because of the benefits of their seniority resulting in the steady influx of Federal fiat dollars. Someone has to draw the line somewhere. I have.

By the way, here is one more huge caveat: I am not a journalist, nor an investigative reporter. There are no facts here, since nothing I found was reliable enough to be considered fact, and for every pseudo-fact I found there was a faux-fact countermanding it. I have taken what I wanted, tried to honestly interpret it for my own purposes, and gleefully offer them here, refutable and fractional though they may be, and most likely are. This is an editorial, not a scholarly paper. My opinion is mine. Feel free to offer me any evidence that may persuade me to change it. I’d rather be writing something funny, stretching the truth to the point of prevarication, but I rather think the truth is not too far away. If we can’t de-fund and abolish a government program as miniscule as this, how will we ever dismantle something larger? Where is the water hot enough that will shrink the pants I bought that are a bit too big? Or should I just eat more to grow to fit them? I always seem to grow to fill the pants, regardless. Governments and I are alike in this.

Of course, if you asked any of The Foundation’s newly named award winners about the importance of The Foundation, and asked them before they had received their check or trip to Disney World, or even after had they received their check but before it cleared the bank, they would raise their hands and swear to the relevance of The Foundation’s positive benefit to all of mankind. I suppose I would, too.